Coronavirus’ Impacts on e-Cigarette Business

Coronavirus has made the e-cigarette business standstill as factories can not run without workers. Shajing situated in Shenzen; China is the largest electric cigarette district. Coronavirus outbreak has brought about an apparent downfall for the company’s manufacturing e-cigarettes. 

Hankang Biotechnology Co Ltd is one of the giant e-cigarette companies. Frank Liao is the CEO of the company who came to Shajing to open a new production plant for the company. But the Coronavirus outbreak started back in December 2019, closed the plant, and the complex enclosed to it. 

As a consequence of the Coronavirus spread, Chinese authorities locked down entire cities and transport links. Even they prevented people from gathering enclosed places like Liao’s factory. 

Among the three main challenges the e-cigarette companies are facing now, the viral outbreak is on the top. The next one is the regulations by the authority. Recently many governments besides China have become strict about lessening the popularity of these products among children.

The main reason behind that many adolescents in the U.S. reported lung diseases and death, directly related to vaping. The third challenge is China has banned online sales of e-cigarettes.   

China has a state-run monopoly on tobacco. So, it is hard for e-cigarette companies to convert traditional smokers into electronic vaporizers. 

E-cigarettes are such devices that are easily portable. The liquid within them is either nicotine or cannabidiol. The World Health Organization confirms that the liquid is a component of cannabis. The users later inhale the vapor from the liquid. 

Shenzhen produces about 85.7 percent of e-cigarettes around the world, leading China to be the leader in this business. The estimation is made by the China Electronics Chamber of Commerce (CECC).

As a giant seller, Hankang sells its products worldwide and China as well. But now this company, along with others, is on the verge of bankruptcy. Liao says, "Lots of companies, especially newer and smaller ones that had been heavily relying on online sales, have been hit hard, causing some to be on the verge of bankruptcy."

This vast business started to face obstacles from the second half of the last year when the Chinese government started clamping down these devices home and abroad. 

Last November, the authority in China banned online e-cigarette sales so that minors can not have access to them. Besides, the number of young people died in the U.S. vape because of lung disease, EVALI. This disease is directly related to e-cigarettes, and also China lost its biggest e-cigarette client. 

According to the US Centers for Disease Control and Prevention, 64 people died because of EVALI until February 4, and the number of hospitalized people are more than 2700. Last month, the U.S. authority banned fruit and mint flavored vapes for children. 

E-cigarettes started its journey ten years ago to help the people who are trying to quit smoking. It was thought to be an alternative to smoking. With its appearance and new concept, it became immensely popular among the new generation. Many entrepreneurs like Liao started to have their business career with this product. 

With their creativity, the experts modified the design of e-cigarettes inward and outward. As a result, younger people started adopting them at a high rate. 

CECC reports that the e-cigarette company in China generated 33.75 billion yuan sales in 2018, including 28.69 billion yuan from exporting.    

This success was about to go in 2019 as per the CECC estimated $6.2bn export volume, and it is evident from the incomplete statistics. The export rate gained 175 percent growth until online shut down of the products. 

As a result of the clampdown, the e-cigarette faced a large-scale threat. 

Ao Weinuo is the secretary-general of the Electronic Cigarette Industry Committee under CECC. According to him, the e-cigarette business has a vast number of employees, like nearly two million. 

Many workers are forced to stay within the company plants as they can not go back to their small towns or villages for virus spreading. So, some working processes are still going on in the e-cigarette business.  

Liao says, "We’re already working now, but we’re all working from home." The companies are running a business from home. 

The companies are hoping that they will soon meet all the health protocols like checking temperature, ensuring all workers wear masks, and conduct other possible tests on them before starting again.  

Liao thinks that when the company starts its operation, it will produce 50,000-100,000 devices per month. Other big companies are also getting ready to do the same.